Elpida in a tight spot as it may face Bankruptcy by April and affect the DRAM market

Its very unfortunate that you do not see an increase DRAM/Chipset manufacturing but either see them filing for bankruptcy. According to DRAMeXchange, the world’s third largest computer chipmaker owes ￥40 billion government loan with ￥80 billion short-term bank loan that needs to be repaid by April.

Samsung Electronics and Hynix have the top 2 spots in NAND manufacturing business, however in the last quarter- except Samsung- every company reported loss in the last quarter. Back in 2009, Qimonda went bankrupt as well. It was being said that due to the innovation from Qimonda in the past and maybe it deserved financial assistance from the Japanese government- or the very least from the competitors. Unfortunately, it didn’t receive any help and had to call it quits.

The difference was that Qimonda was hit hard in Finance and technology as it was able to keep up with the manufacturers so there was very little to talk about at that time. In Elpida’s case, money is the issue. Many experts do believe that Elpida should get a bailout package from the Japanese government as the shutdown of the company will lead to the industry being dominated by smaller manufacturers. There’s also a fear that this will increase the price in DRAMs and eventually affecting buyers who are hunting down memory kits. However, there are those Elpida’s exit may also boost rivalry, as said in Taipei Times.

It wasn’t too long ago that we’ve seen more than 100% price increase for hard drives in the past year. Such issues might discourage users in the short term, but Elpida’s exit will affect the DRAM market. It’s also a very sticky situation as Elpida is currently testing their 25nm DRAMs. For now, the company has barely 2 months to repay the loans and keep the company going- which doesn’t really look good as of now.

Currently the DRAM market is dominated by Samsung, Hynix,Nanya, Micron and Toshiba.